IEA Thinks Today’s Energy Crisis Worse Than the Oil Crisis in the 1970s
- July 13, 2022
- Posted by: Quatro Strategies
- Category: Energy
International Energy Agency (IEA) Executive Director Birol said Russia’s invasion of Ukraine has a bigger impact on global energy supplies than the Arab oil embargo in the 1970s. Birol said during his speech at the Sydney Energy Forum (SEF) that Russia’s role as one of the world’s largest oil and gas exporter, as well as its significance as a coal exporter make this crisis worse than the 1970s as it was only triggered by oil.
Birol added that he believed energy consumers would respond quickly to supply shocks as they did in the 1970s. Furthermore, acceleration in use of renewable energy, hydrogen and battery storage technology could help.
“We are in the middle of the first global energy crisis,” Birol said. “The world has never witnessed such a energy crisis in terms of its depth and consequences. It is interwoven by many factors including geopolitics, and I believe we may not have seen the worst of it yet. This winter in Europe will be very, very difficult.”
He further argued that in the 1970s, there was only an oil crisis after the Arab oil embargo in 1974 and the Iranian revolution in 1979. “Today we have a crisis with oil, gas and coal where all of their prices are going up,”. Russia’s status as the number one oil exporter of the world, the number one gas exporter and a major player in the coal market before its invasion of Ukraine is the reason the world is seeing the entire energy system going through a crisis, according to Birol.
Birol cited the readily available clean energy technologies as a difference between the 1970s and now. He said the share of renewables, especially solar energy, in the total electricity supply has been increasing. “In 2019 only 2% of new car sales were electric cars, this year we are going to see almost 15% of all the cars sold in the world being electric cars,”
Another difference, he argued, that many countries in the world have greenhouse gas emissions reduction targets.
Birol added that he expects the energy crisis to prompt a response from energy consuming countries. “The current situation may also be a turning point in the history of energy. I believe this for two reasons, first, the drivers for a clean energy future today are economic realities, climate commitments and at the same time national energy security.”
He stated that the second reason is based on historical behavior. “In the 1970s we had two oil crisis, one after another. They also led to innovation in energy policies,”
“We are going to see some tension in some countries on how they are going to align their national energy security demands with climate demand, but countries should not lock in large scale fossil fuel investments,” Birol said.
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